New NPS, EPF rules explained: Key updates that will impact your retirement corpus

Retirement planning may feel boring, but 2025 marked a turning point for EPF and NPS subscribers. Policymakers addressed long-standing issues such as rigid withdrawals, paperwork-heavy processes, and limited investment freedom. The retirement system is now more liquid, more digital, and better aligned with real-life needs.

The compulsory annuitisation requirement has been cut from 40% to 20%, removing a major psychological barrier for retirees. Subscribers can now withdraw up to 80% of their corpus at exit. While this improves liquidity, clarity on the tax treatment of the additional 20% withdrawal is still awaited.

NPS rules are now more flexible for subscribers with smaller retirement balances. If your total NPS corpus is Rs 8 lakh or less, you can withdraw 100% of your savings as a lump sum, with no mandatory annuity purchase.

NPS subscribers are no longer strictly locked in until age 60. Exit is now permitted after completing 15 years in the system. Those who wish to remain invested beyond retirement can continue till 85.
Additionally, before turning 60, the number of partial withdrawals allowed has increased to 4, with a minimum gap of 4 years between withdrawals.

From October 2025, non-government subscribers can allocate up to 100% of their corpus to equity, compared to the earlier 75% cap. This is particularly attractive for younger investors with long investment horizons.

Earlier, there were 13 different reasons for withdrawal, each with its own rules and conditions. These have now been consolidated into 3 simple categories: essential needs, housing needs, and special circumstances. Plus, the minimum service requirement for eligibility has been reduced to 12 months for all types of withdrawals.

A major pain point, employer approval, has been largely eliminated. If your UAN is Aadhaar-linked and KYC details are verified, EPF transfers and withdrawals can now be processed without employer intervention.
Annexure K (transfer certificate) is now directly downloadable from the member portal. This significantly benefits employees switching jobs.

EPFO is moving toward a fully automated, self-service model. Claims up to Rs 5 lakh can now be auto-settled digitally without manual processing. Face authentication through the UMANG app has been introduced to enhance security and convenience.